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Virginia M. Elliott, Deborah Knoblauch, Jon v. Leatherstocking Corporation

April 14, 2011


The opinion of the court was delivered by: Thomas J. McAVOY Senior United States District Judge


Plaintiffs Virginia Elliott, Deborah Knoblauch, Jon Francis, and Laura Rodgers ("Plaintiffs") commenced the instant action against Defendant Leatherstocking Corporation asserting violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 206 and 207; the New York State Minimum Wage Act, New York Labor Law Art. 19; Section 196-d of the New York Labor Law; and claims for the wrongful interference with prospective economic advantage; conversion; negligence; and breach of contract. Presently before the Court is Defendant's motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c).


Because the instant matter is before the Court on a motion under Rule 12(c), the following facts are taken from the Complaint and presumed to be true.

Defendant owns and operates the Otesaga Hotel and Resort in Cooperstown, New York. Defendant employed Plaintiffs Virginia Elliott and Deborah Knoblauch as room attendants, Plaintiff Jon Francis as a dining room busser and banquet server, and Plaintiff Laura Rodgers as a dining room food server and banquet server. The basic premises of the complaint are that:

(1) Defendant did not pay to Plaintiffs the correct amount of funds it collected from its guests as a mandatory service charge in lieu of voluntary gratuities;

(2) Defendant wrongfully included the collected service charges as part of the wages of the Plaintiff room attendants and did not inform them that the service charges were included in the calculation of their hourly rate;

(3) Defendant did not advise the room attendants that it was including service charges as part of their hourly wage rate and, therefore, their base wages should be deemed to be the full amount paid by Defendant and Defendant should be found not to have paid the service charges to the room attendants; and

(4) based on the foregoing, Defendant did not pay proper overtime or minimum wages to its personnel, did not comply with Labor Law § 196-d, converted Plaintiffs' monies, interfered with Plaintiffs' prospective business relations, and breached the contract between Defendant and Defendant's customers.

The specific allegations are as follows.

Defendant charges all guests paying for lodging a daily service charge. Defendant represented to its guests that these service charges are "distributed to the room attendant and the dining room personnel for services rendered." Am. Compl. at ¶ 21. Defendant also charges its dining room guests who do not stay overnight at the hotel a service charge based on a percentage of the customers' food or beverage charges. Defendant represented to its dining room only customers that the service charges were in lieu of tips the customers might otherwise leave. Id. Plaintiffs claim that Defendant did not pay the collected service charges or: failed and refused to pay such monies, or the full amount of such monies so collected, to the class members providing such services and instead kept all or a portion of such monies for its own benefit, such benefit to the defendant including paying such monies or a portion of such monies to persons employed by the defendant who were not members of the [Plaintiff] class or not members of the [Plaintiff] class providing the services for which such charges were collected and by doing so reducing the costs the defendant would otherwise have to pay itself to compensate such persons, the defendant also concealing such actions from its customers, the [Plaintiff] class members and the general public. [sic] failed to pay the full amount of those monies to them.

Id. at ¶ 23. *fn1

It is further claimed that Defendant represented to its room attendants that they would be paid a specific hourly rate, but did not disclose that a portion of the hourly rate was comprised of monies collected from the service charges. In this regard, the Complaint alleges that:

Defendant also represented to [Plaintiffs] . . . that they were receiving a basic hourly wage, paid by the defendant, of $9.00 to $11.00 an hour or a similar amount and intentionally did not disclose . . . that defendant had determining [sic] it was paying most of that wage from amounts it collected from the service charges it imposed on its customers, defendant secretly determining that it was only paying the New York State "tip credit" hourly minimum wage to such room attendant employees from funds that it designated as not being collected from customer service charges, such non-disclosure by the defendant being consistently maintained until sometime in 2009 or 2010 even when such room attendants prior to that date had repeatedly inquired about the disposition of the service charges paid by lodging customers, the defendant responding to all such inquiries without actually disclosing to such room attendants that the defendant considered all such service charge payments to have already been received by such room attendants in the basic hourly wage paid by the defendant to such class members.

Am. Compl. at ¶ 24. *fn2

Plaintiffs claim that Defendant's actions violate the Federal and State minimum wage and overtime laws (First and Second Causes of Action), violate N.Y. Labor Law ยง 196-d (Third Cause of Action), and constitute the wrongful interference with prospective economic advantage (Fourth Cause of Action), Conversion (Fifth Cause of Action), Negligence (Sixth Cause of Action), and Breach of Contract (Seventh Cause of Action). Presently before the Court is Defendant's ...

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